Corporate Governance

Remuneration

The broad principles that guide the ERCC in its administration of
fees, benefits, remuneration and incentives for the Board of Directors
and Senior Management are set out below.

Directors’ Fees and Incentives

Singtel’s Group CEO is an Executive Director and is therefore
remunerated as part of Senior Management. She does not receive
Directors’ fees.

For the financial year ended 31 March 2013, the fees for nonexecutive
Directors comprised a basic retainer fee, additional fees
for appointment to Board Committees, attendance fees for ad hoc
Board meetings and a travel allowance for Directors who were
required to travel out of their country or city of residence to attend
Board meetings and Board Committee meetings which did not
coincide with Board meetings. The framework for determining
non-executive Directors’ fees was as follows:

Basic Retainer Fee

Board Chairman

S$220,000 per annum

Director

S$110,000 per annum

Fee for appointment to Audit Committee and Finance and Investment Committee

Committee chairman

S$50,000 per annum

Committee member

S$35,000 per annum

Fee for appointment to any other Board Committee

Committee chairman

S$35,000 per annum

Committee member

S$25,000 per annum

Attendance Fee per Ad Hoc Board meeting

S$2,000

Travel allowance for Board Meetings
and Board Committee Meetings
which do not coincide with
Board meetings (per day of travel
required to attend meeting)

S$3,000

The proposed framework for Directors’ fees for the financial year
ending 31 March 2014 is the same as that for the financial year
ended 31 March 2013 except that the fee for each of the chairmen of
the AC and the FIC will be increased from S$50,000 to S$60,000 per
annum and the fee for the chairman of the ERCC will be increased
from S$35,000 to S$45,000 per annum to align fees with comparable
benchmarks. As Singtel has diverse and complex operations and
investments internationally and is not just a Singapore-based
company, the fees are benchmarked against fees paid by other
comparable companies in Singapore and Australia.

Remuneration of Non-Executive Directors

The aggregate compensation paid to Singtel non-executive
Directors for services in all capacities for the financial year ended
31 March 2013 is set out in the table below. The aggregate
compensation paid to or accrued to the Singtel Executive Director
for the financial year ended 31 March 2013 is set out here.

Name of Director

Director's Fees(1) (S$)

Simon Israel(2)

378,048

Bobby Chin(3)

154,914

Fang Ai Lian

199,000

David Gonski AC(4)

13,333

Dominic Ho

217,000

Low Check Kian

184,000

Peter Mason AM

212,952

Kaikhushru Nargolwala

227,000

Peter Ong(5)

184,000

Ong Peng Tsin(6)

250,000

Notes:

Directors’ fees are paid on a half-yearly basis in arrears.

In addition to his fees, Mr Simon Israel also received car-related benefits with a taxable value of S$16,430.

Appointed to the Board on 1 May 2012.

Appointed to the Board on 1 March 2013.

Fees for Singapore public sector Director are processed in accordance with the framework of the Singapore Directorship and Consultancy Appointments Council.

Fees included travel allowance for attending Board Committee meetings which did not coincide with Board meetings.

No employee of the Group who is an immediate family member of a
Director was paid remuneration that exceeded S$50,000 during the
financial year ended 31 March 2013.

Directors’ fees are subject to the approval of shareholders at the
AGM. Singtel seeks shareholders’ approval for Directors’ fees for the
financial year ending 31 March 2014 so that Directors’ fees can be
paid on a half-yearly basis in arrears. No Director decides his own fees.

There are no retirement benefit schemes or share-based
compensation schemes in place for non-executive Directors. To
align Directors with shareholders’ interests, Directors are encouraged
to acquire Singtel shares each year from the open market to the
extent of one-third of their fees until they hold the equivalent of
one year’s fees in shares, and to continue to hold the equivalent of
one year’s fees in shares while they remain on the Board.

Remuneration of Executive Director and Senior Management

The remuneration framework and policy is designed to support the
implementation of the Group’s strategy and enhance shareholder
value. The ERCC adopts the following guiding principles when
determining the remuneration arrangements for Senior Management:

Alignment with shareholders’ interest

Align interest between management and shareholders

Select appropriate performance metrics for annual and longterm incentive plans to support business strategies and on-going enhancement of shareholder value

Ensure targets are appropriately set for threshold, target and stretch performance levels

Competitive remuneration

Link a significant proportion of remuneration to performance, both on an annual and long-term basis

Pay-for-Performance

Measure performance based on a holistic balanced scorecard approach, comprising both financial and non-financial metrics

Structure a significant but appropriate proportion of remuneration to be at risk, taking into account risk policies of the Group

Build flexibility into remuneration package to allow for clawback if long-term performance targets are not met

Effective implementation

Meet rigorous corporate governance requirements

The ERCC recognises that the Group operates in a multinational
and multifaceted environment and reviews remuneration through
a process that considers Group, business unit and individual
performance as well as relevant comparative remuneration in the
market. The performance evaluations for Senior Management have
been conducted for the financial year in accordance with the above
considerations.

In 2012/2013, the ERCC engaged Aon Hewitt Singapore Pte Ltd
(Aon Hewitt) to provide valuation and vesting computation for
grants awarded under the Singtel Performance Share Plan and
Carrots Consulting Pte Ltd (Carrots) to design the total remuneration
framework. Both Aon Hewitt and Carrots and their respective
consultants are independent and not related to Singtel or any of
its Directors.

In line with market practice, Singtel may, under special circumstances,
compensate Senior Management for their past contributions when
their services are no longer needed; for example, due to redundancies
arising from reorganisation or restructuring of the Group.

The ERCC has the discretion not to award incentives in any year if
an executive is involved in misconduct or fraud resulting in financial
loss to the company.

Remuneration Components

The remuneration structure for Senior Management comprises
five components – fixed remuneration, variable bonus, provident/
superannuation fund, benefits and long-term incentives. The structure
is designed such that the percentage of the variable component
of Senior Management’s remuneration increases as they move
up the organisation. On an annual basis, the ERCC proposes the
compensation for the Group CEO, CEO Group Consumer, CEO
Group Digital L!fe, CEO Group Enterprise and Group CFO (collectively
defined as “Key Management”) for the Board’s approval and approves
compensation for the other Senior Management.

Fixed Remuneration

The fixed remuneration comprises base salary and reflects the
market worth of the job but may vary with responsibilities,
performance, qualifications and the experience that the individual
brings to the role.

In Australia, consistent with local market practice, executives may
opt for a portion of their salaries to be received in tax-effective
benefits-in-kind, such as superannuation contributions and motor
vehicles, while maintaining the same overall cost to the company.

Variable Bonus

Variable bonus comprises the Performance Bonus and the
Value Sharing Bonus. In determining the final variable bonus
payments, the ERCC considers the overall Group, business unit and
individual performance as well as relevant market remuneration
benchmarks.

Performance Bonus

Performance bonus is designed to support the Group’s business
strategy and the on-going enhancement of shareholder
value through the delivery of annual financial strategy and
operational objectives. On an individual level, the performance
bonus will vary according to the actual achievement against
Group, business unit and individual performance objectives.
While these objectives are different for each executive, they are
assessed on the same principles across two broad categories
of targets: Business and People. Business targets comprise
financials, strategy, customer and business processes. People
targets comprise leadership competencies, core values, people
development and staff engagement. In addition, the executives
are assessed on teamwork and collaboration across the Group.

Value Sharing Bonus (VSB)

A portion of Senior Management’s annual remuneration is tied
to the Economic Profit (EP) performance of the Group in the
form of the Value Sharing Bonus (VSB) which is also extended to
top management executives. VSB is used to defer their bonuses
over a time horizon to ensure alignment with sustainable value
creation for the shareholders over the longer term. A ‘VSB bank’
is created for each executive to hold the VSB allocated to him
or her in any year. One-third of the ‘bank’ balance would be paid
out in cash provided it is positive. The remaining balance will
be carried forward and at risk as it is subject to clawback and
could be reduced in the event of EP underperformance in the
future years.

Provident/Superannuation Fund

This is made up of Singtel’s contributions towards the
Singapore Central Provident Fund or the Optus Superannuation
Fund or any other chosen fund, as applicable.

Benefits

Singtel provides benefits consistent with local market practice,
such as an in-company medical scheme, club membership,
employee discounts and other benefits that may incur Australian
Fringe Benefits Tax, where applicable. Participation in such benefits
is dependent on the country in which the executive is located.
For expatriates located away from home, additional benefits such
as accommodation, children’s education and tax equalisation
may be provided.

Long-Term Incentives

Long-term incentives, with a focus on encouraging the delivery of
long-term growth and shareholder value, are delivered through
equity plans, to drive an ownership culture and retain key talents.
These are provisionally granted to Senior Management based on
performance for the year ended 31 March 2013.

From 1 April 2012, Singtel ceased to grant General Awards (GA)
and Senior Management Awards (SMA) under the Singtel
Performance Share Plan (see description of GA and SMA in
previous annual reports). The Singtel Performance Share Plan
was terminated in July 2012 with the adoption of the Singtel
Performance Share Plan 2012. The termination of the Singtel
Performance Share Plan is without prejudice to the rights of
holders of awards outstanding under the Singtel Performance
Share Plan as at the date of termination of the plan.

Two new types of award were introduced in 2012 – the
Performance Share Award (PSA) and the Restricted Share Award
(RSA) – with grants made at the discretion of the ERCC. The PSA is
granted to top management while a broader group of executives
are eligible for the RSA. The number of performance shares
awarded is determined using the valuation of the shares based
on a Monte-Carlo simulation.

The share awards are conditional upon the achievement of
predetermined performance targets over the performance
period. These performance conditions and targets are approved
by the ERCC at the beginning of the performance period. The
final number of performance shares vested to the recipient will
depend on the level of achievement of these targets over the
performance period, subject to the approval of the ERCC.

A significant portion of the remuneration package for our Senior
Management is delivered in Singtel shares to ensure that their
interests are aligned with shareholders. This is further supported
by significant shareholding requirements in which they are
required to retain at least the equivalent of their annual base
salary in shares.

The details of the vesting criteria for the two awards are as
follows:

Restricted Share Award (RSA)

The Restricted Share Award (RSA) has a two-year performance period
from 1 April 2013 to 31 March 2015. Shares are allocated according
to the following performance conditions:

50 per cent based on Singtel Group’s Net Profit After Tax (NPAT) – Singtel Group NPAT achieved against predetermined targets; and

^ For achievement between these performance levels, the percentage of shares under this tranche that will vest would vary accordingly.

The above performance conditions were chosen as they are key
drivers of shareholder value creation and aligned to the Group’s
business objectives.

Special provisions for vesting and lapsing of awards apply for events
such as the termination of employment, misconduct, retirement and
any other events approved by the ERCC. Upon occurrence of any of
the events, the ERCC will consider, at its discretion, whether or not
to release any award, and will take into account circumstances on a
case-by-case basis, including (but not limited to) the contributions
made by the employee.

Singtel employees are prohibited from entering into transactions in
associated products which limit the economic risk of participating in
unvested entitlements under Singtel’s equity-based remuneration
schemes.

Remuneration of Key Management and Senior Management

For the financial year ended 31 March 2013, there were no termination, retirement and post-employment benefits granted to Directors and
Key Management.

Remuneration of Executive Director

The aggregate compensation paid to or accrued to Group CEO (Chua Sock Koong) for the financial year ended 31 March 2013 is set out in the
table below:

Name

Fixed Remuneration(1) ($)

Variable Bonus(2) ($)

Provident Fund(3) ($)

Benefits(4) ($)

Total Cash & Benefits(5) ($)

Restricted Share Award (RSA)(6) (no. of shares)

Performance Share Award (PSA)(6) (no. of shares)

Chua Sock Koong

S$1,647,100

S$2,880,000

S$9,850

S$74,045

S$4,610,995

98,060

1,418,169

Performance shares granted, vested and lapsed for Ms Chua as at 31 March 2013 are as follows:

General Award (GA)

Senior Management Award (SMA)

Performance Share Awards

Vesting Date

Granted (‘000)

Vested (‘000)

Lapsed (‘000)

Granted (‘000)

Vested (‘000)

Lapsed (‘000)

2010 Awards

1-Jun-13

934

526

408

630

558

72

2011 Awards

1-Jun-14

1,013

-

-

655

-

-

Restricted Share Award (RSA)

Performance Share Award (PSA)

Performance Share Awards

Vesting Date

Granted (‘000)

Vested (‘000)

Lapsed (‘000)

Granted (‘000)

Vested (‘000)

Lapsed (‘000)

2012 Awards

1-Jun-15

119

-

-

1,273

-

-

Notes:

Fixed Remuneration refers to base salary and Annual Wage Supplement earned for the year ended 31 March 2013.

Variable Bonus comprises both the Performance Bonus and the Value Sharing Bonus (VSB). Performance bonus varies according to the actual achievement against Group, business unit and individual performance objectives. The VSB is tied to the Economic Profit (EP) performance of the Group to ensure alignment with sustainable value creation for shareholders over the longer term. For more details, please refer here.

Provident Fund in Singapore represents payments in respect of company statutory contributions to the Singapore Central Provident Fund.

Benefits are stated on the basis of direct costs to the company and include car benefits, flexible benefits and other non-cash benefits such as medical cover and club membership.

Total Cash & Benefits is the sum of Fixed Remuneration, Variable Bonus, Provident Fund and Benefits for the year ended 31 March 2013.

Long Term Incentives are awarded in the form of performance shares. Grants of the Restricted Share Award (RSA) and Performance Share Award (PSA) under the Singtel Performance Share Plan were made in June 2013 for performance for the year ended 31 March 2013. The per unit fair values of the RSA and PSA are S$3.246 and S$2.020 respectively. The performance conditions for the awards are detailed here.

Remuneration of Other Key Management and Senior Management

The aggregate compensation paid to or accrued to the other top five Key Management and Senior Management for the financial year ended
31 March 2013 is set out in the table below:

Name

Fixed Remuneration(1) ($)

Variable Bonus(2) ($)

Provident/Superannuation Fund(3) ($)

Benefits(4) ($)

Total Cash & Benefits(5) ($)

Restricted Share Award (RSA)(6) (no. of shares)

Performance Share Award (PSA)(6) (no. of shares)

The following are in alphabetical order:

Bill ChangCEO GroupEnterprise

S$760,600

S$950,000

S$13,600

S$57,689

S$1,781,889

29,267

423,268

Allen LewCEO GroupDigital L!fe/Country Chief OfficerSingapore

S$1,152,900

S$2,025,000

S$8,175

S$63,055

S$3,249,130

59,335

858,119

Jeann Low (8)Group CFO

S$910,000

S$1,125,000

S$10,900

S$55,779

S$2,101,679

30,808

445,545

Paul O’Sullivan(7)(9)CEO GroupConsumer/ CountryChief OfficerAustralia

A$1,170,023

A$1,133,028

A$211,775

A$181,337

A$2,696,163

84,509

1,221,881

Kevin Russell(7)(9)CEO ConsumerAustralia

A$875,018

A$720,193

A$143,569

A$9,586

A$1,748,366

57,498

369,482

Total

S$5,443,811

S$6,474,531

S$487,977

S$421,153

S$12,827,472

261,417

3,318,295

Performance shares granted, vested and lapsed for the above five executives as at 31 March 2013 are as follows:

General Award (GA)

Senior Management Award (SMA)

Performance Share Awards

Vesting Date

Granted (‘000)

Vested (‘000)

Lapsed (‘000)

Granted (‘000)

Vested (‘000)

Lapsed (‘000)

2010 Awards

1-Jun-13

1,957

1,101

856

1,320

1,169

151

2011 Awards

1-Jun-14

2,167

-

-

1,401

-

-

Restricted Share Award (RSA)

Performance Share Award (PSA)

Performance Share Awards

Vesting Date

Granted (‘000)

Vested (‘000)

Lapsed (‘000)

Granted (‘000)

Vested (‘000)

Lapsed (‘000)

2012 Awards

1-Jun-15

276

-

-

2,634

-

-

16-Jul-15

20

-

-

97

-

-

Notes:

Fixed Remuneration refers to base salary and Annual Wage Supplement (if applicable) earned for the year ended 31 March 2013.

Variable Bonus comprises both the Performance Bonus and the Value Sharing Bonus (VSB). Performance bonus varies according to the actual achievement against Group, business unit and individual performance objectives. The VSB is tied to the Economic Profit (EP) performance of the Group to ensure alignment with sustainable value creation for shareholders over the longer term. For more details, please refer here.

Provident Fund in Singapore represents payments in respect of company statutory contributions to the Singapore Central Provident Fund. Superannuation Fund in Australia represents payments in respect of the superannuation guarantee levy to the superannuation scheme. Any contributions made by an individual may be salary sacrificed, and are part of fixed remuneration.

Benefits are stated on the basis of direct costs to the company and include overseas assignment benefits, tax equalisation, car benefits, flexible benefits and other non-cash benefits such as medical cover, club membership and Australian Fringe Benefits Tax, where applicable.

Total Cash & Benefits is the sum of Fixed Remuneration, Variable Bonus, Provident/Superannuation Fund and Benefits for the year ended 31 March 2013.

Long-Term Incentives are awarded in the form of performance shares. Grants of the Restricted Share Award (RSA) and Performance Share Award (PSA) under the Singtel Performance Share Plan were made in June 2013 for performance for the year ended 31 March 2013. The per unit fair values of the RSA and PSA S$3.246 (A$2.511) and S$2.020 (A$1.563) respectively. The performance conditions for the awards are detailed here.

With effect from 1 May 2013, Mr Kevin Russell has been appointed Country Chief Officer Australia.

Benefits for Ms Jeann Low include tax equalisation in relation to her past secondment to Optus, Australia.

Mr Paul O’Sullivan and Mr Kevin Russell are based in Australia and remunerated in Australian dollars.